India among worst in corporate fraud, shows survey

Washington: India has one of the highest percentages of companies where corporate fraud, corruption and bribery were detected, according to a new survey of large local and multinational companies across the world.

Conducted by the Economist Intelligence Unit and commissioned by New York-based risk consultancy firm Kroll Inc., the survey asked around 770 senior executives if they had discovered any fraud in their companies in 2014.

Around three-quarters of the executives surveyed said that they encountered corruption, bribery and stealing of proprietary information among other things.

The problem is even worse in emerging countries like India, where 80 percent of the respondents said they had come across fraud in their firm.

India was more prone to some types of fraud than any other country. For instance, the survey found that Indian respondents were most likely to report encountering corruption and bribery, regulatory breaches, money laundering and theft of intellectual property.

Globally, 11 percent of all executives surveyed said, they discovered cases of in-house corruption and bribery while 25 percent of respondents from India said that they came across such types of fraud in the past year, according to the report.

In comparison, only around 18 percent of Chinese executives and 20 percent of Russians said they encountered corruption and bribery.

One reason that India’s numbers appear higher than some of its emerging market peers might be because more and more Indian companies have in recent years started reporting and confronting corrupt practices, the Wall Street Journal said.

Even so, fraud in India remains a growing problem, both for Indian companies and investors, the Journal said, citing Reshmi Khurana, head of South Asia for Kroll.

Part of the problem is that accounting standards and financial regulations are not strictly implemented.

Auditing of firm balance sheets, for instance, is supposed to be independent but is sometimes carried out by auditors who are too close to the company’s management.

In addition, the standards for corporate governance within Indian companies are broadly low, according to Khurana as cited by the Journal.

Besides bribery to government officials, one key issue for companies in India is executives taking bribes to give a big order to a vendor, or to hire someone, Khurana was quoted as saying.

According to the fraud report, India’s record on the lack of compliance with regulations is also the worst among the countries surveyed.

A fifth of respondents from India said they had found instances of regulatory or compliance breach, compared to a global average of 12 percent.

India, though, appears slightly better compared to the global average on a handful of matrices, including the theft of physical assets.

While 22 percent of respondents globally reported such theft, only 17.5 percent of respondents from India said they had come across it.

The report also highlighted that India uses the largest amount of groundwater -- 24 per cent of the global total and the country is the third largest exporter of groundwater -- 12 per cent of the global total.

Global groundwater depletion - where the amount of water taken from aquifers exceeds the amount that is restored naturally - increased by 22 per cent between 2000 and 2010, said the report, adding that India's rate of groundwater depletion increased by 23 per cent during the same period. Pixabay

As many as one billion people in India live in areas of physical water scarcity, of which 600 million are in areas of high to extreme water stress, according to a new report.

Globally, close to four billion people live in water-scarce areas, where, for at least part of the year, demand exceeds supply, said the report by non-profit organisation WaterAid.

This number is expected to go up to five billion by 2050, said the report titled “Beneath the Surface: The State of the World’s Water 2019”, released to mark World Water Day on March 22.

Pure water droplet. Pixabay

Physical water scarcity is getting worse, exacerbated by growing demand on water resources and and by climate and population changes.

By 2040 it is predicted that 33 countries are likely to face extremely high water stress – including 15 in the Middle East, most of Northern Africa, Pakistan, Turkey, Afghanistan and Spain. Many – including India, China, Southern Africa, USA and Australia – will face high water stress.

Globally, close to four billion people live in water-scarce areas, where, for at least part of the year, demand exceeds supply, said the report by non-profit organisation WaterAid. Pixabay

Global groundwater depletion – where the amount of water taken from aquifers exceeds the amount that is restored naturally – increased by 22 per cent between 2000 and 2010, said the report, adding that India’s rate of groundwater depletion increased by 23 per cent during the same period.

The report also highlighted that India uses the largest amount of groundwater — 24 per cent of the global total and the country is the third largest exporter of groundwater — 12 per cent of the global total.

The WaterAid report warned that food and clothing imported by wealthy Western countries are making it harder for many poor and marginalised communities to get a daily clean water supply as high-income countries buy products with considerable “water footprints” – the amount of water used in production — from water-scarce countries. (IANS)